Microsoft, OpenAI strike new landmark AI deal valuing ChatGPT owner at whopping $500B

Core Insights - Microsoft and OpenAI have reached a deal allowing OpenAI to restructure into a public benefit corporation, valuing it at $500 billion and providing more operational freedom [1] - The deal alleviates previous constraints on OpenAI's ability to raise capital, which were established in a 2019 agreement with Microsoft [1][7] - Microsoft retains a 27% stake in OpenAI Group PBC, valued at approximately $135 billion, after investing $13.8 billion, resulting in a nearly 10-fold return on investment [3] Financial Implications - Microsoft shares increased by 2.5%, pushing its market value above $4 trillion [3][10] - OpenAI will purchase $250 billion worth of Azure cloud computing services from Microsoft, while Microsoft will relinquish its right of first refusal for providing computing services to OpenAI [12] Structural Changes - The new structure allows the OpenAI Foundation, a nonprofit, to maintain control over the for-profit entity, simplifying OpenAI's corporate structure [8] - An independent panel will be required to verify OpenAI's claims of reaching artificial general intelligence (AGI) [8] Future Outlook - The deal ensures a continued partnership between Microsoft and OpenAI until at least 2032, with Microsoft retaining certain rights to OpenAI's products and AI models [4][12] - The restructuring is expected to provide a clearer path for OpenAI's fundraising efforts and innovation, despite ongoing scrutiny regarding transparency and safety [9][12]